IRMA aspirants

[eprerit]

electronics engineer with 4 yrs. work ex.
prerit
appearing for irma 2006.....different from monotonous mba
develop india..a good career ..
G.K. section is the key..
others with rural management as their dream career post here!!

[TinMan]

Originally Posted by eprerit

electronics engineer with 4 yrs. work ex.
prerit
appearing for irma 2006.....different from monotonous mba
develop india..a good career ..
G.K. section is the key..
others with rural management as their dream career post here!!

Dude
but thats really difficult all the GK questions in IRMA test are all about milk and milk and milkproducts

Entirely different from other exams GK any way to tackle these would be welcome
Bye
Krishna

[Scorpio_19]

Right dudes, let's restrict this thread strictly to IRMA GK. For the other sections of the test, there are ample resources available on Pagalguy. Let's begin on Rural GK, please post your questions/articles on the same.

[Scorpio_19]

MicroFinance Institutions In India

Introduction:
1. A range of institutions in public sector as well as private sector offers the micro finance services in India. They can be broadly categorized in to two categories namely, formal institutions and informal institutions. The former category comprises of Apex Development Financial Institutions, Commercial Banks, Regional Rural Banks, and Cooperative Banks that provide micro finance services in addition to their general banking activities and are referred to as micro finance service providers. On the other hand, the informal institutions that undertake micro finance services as their main activity are generally referred to as micro Finance Institutions (mFIs). While both private and public ownership are found in the case of formal financial institutions offering micro finance services, the mFIs are mainly in the private sector.

micro Finance Service Providers
2. The micro finance service providers include apex institutions like National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), and, Rashtriya Mahila Kosh (RMK). At the retail level, Commercial Banks, Regional Rural Banks, and, Cooperative banks provide micro finance services. Today, there are about 60,000 retail credit outlets of the formal banking sector in the rural areas comprising 12,000 branches of district level cooperative banks, over 14,000 branches of the Regional Rural Banks (RRBs) and over 30,000 rural and semi-urban branches of commercial banks besides almost 90,000 cooperatives credit societies at the village level. On an average, there is at least one retail credit outlet for about 5,000 rural people. This physical reaching out to the far-flung areas of the country to provide savings, credit and other banking services to the rural society is an unparalleled achievement of the Indian banking system. In the this paper an attempt is made to deal with various aspects relating to emergence of private micro finance industry in the context of prevailing legal and regulatory environment for private sector rural and micro finance operators.

The Emergence of Private Micro finance Industry
3. The micro finance initiative in private sector can be traced to the initiative undertaken by Ms.Ela Bhat for providing banking services to the poor women employed in the unorganised sector in Ahmedabad City of Gujarat State. Shri Mahila SEWA (Self Employed Women’s Association) Sahakari Bank was set up in 1974 by registering it as a Urban Cooperative Bank. Since then, the bank is providing banking services to the poor self-employed women working as hawkers, vendors, domestic servant etc. As on March 2003, the mFI had a membership of 30,000, seventy per cent of whom are from urban area. The deposit and loan portfolio stood at Rs 623.9 million ($ 13.86 million) and Rs133.6 million ($2.97 million) respectively. Though the mFI is making profit, yet the SEWA bank model of mFI has not been replicated elsewhere in the country.
4. In the midst of the apparent inadequacies of the formal financial system to cater to the financial needs of the rural poor, NABARD sponsored an action research project in 1987 through an NGO called MYRADA. For this purpose a grant of Rs. 1 million ($22,222) was provided to MYRADA for an R&D programme related to credit groups. Encouraged by the results of field level experiments in group based approach for lending to the poor, NABARD launched a Pilot Project in 1991-92 in partnership with Non-governmental Organisations (NGOs) for promoting and grooming self help groups (SHGs) of homogeneous members and making savings from existing banks and within the existing legal framework. Steady progress of the pilot project led to the mainstreaming of the SHG-Bank Linkage Programme in 1996 as a normal banking activity of the banks with widespread acceptance. The RBI set the right policy environment by allowing savings bank accounts of informal groups to be opened by the formal banking system. Launched at a time when regulated interest rates were in vogue, the banks were expected to lend to SHGs at the prescribed rates, but the RBI advised the banks not to interfere with the management of affairs of SHGs, particularly on the terms and conditions on which the SHGs disbursed loans to their members.
5. The uniqueness of the micro finance through SHG is that it is a partnership based approach and encouraged NGOs to undertake not only social engineering but also financial intermediation especially in areas where banking network was not satisfactory. The rapid progress achieved in SHG formation, which has now turned into an empowerment movement among women across the country, laid the foundation for emergence of mFIs in India.

mFIs and Legal Forms
6. With the current phase of expansion of the SHG – Bank linkage programme and other mF initiatives in the country, the informal micro finance sector in India is now beginning to evolve. The mFIs in India can be broadly sub-divided into three categories of organizational forms as given in Table 1. While there is no published data on private mFIs operating in the country, the number of mFIs is estimated to be around 800. However, not more than 10 mFIs are reported to have an outreach of 100,000 micro finance clients. An overwhelming majority of mFIs are operating on a smaller scale with clients ranging between 500 to 1500 per mFI. The geographical distribution of mFIs is very much lopsided with concentration in the southern India where the rural branch network of formal banks is excellent. It is estimated that the share of mFIs in the total micro credit portfolio of formal & informal institutions is about 8 per cent.

Types of mFIs
Estimated Number*
Legal Acts under which Registered
1. Not for Profit mFIs
a.) NGO - mFIs

400 to 500
Societies Registration Act, 1860 or similar Provincial Acts
Indian Trust Act, 1882
b.) Non-profit Companies
10
Section 25 of the Companies Act, 1956
2. Mutual Benefit mFIs
a.) Mutually Aided Cooperative Societies (MACS) and similarly set up institutions
200 to 250
Mutually Aided Cooperative Societies Act enacted by State Government
3. For Profit mFIs
a.) Non-Banking Financial Companies (NBFCs)
6
Indian Companies Act, 1956
Reserve Bank of India Act, 1934
Total
700 - 800



7. NGO mFIs: There are a large number of NGOs that have undertaken the task of financial intermediation. Majority of these NGOs are registered as Trust or Society. Many NGOs have also helped SHGs to organise themselves into federations and these federations are registered as Trusts or Societies. Many of these federations are performing non-financial and financial functions like social and capacity building activities, facilitate training of SHGs, undertake internal audit, promote new groups, and some of these federations are engaged in financial intermediation. The NGO mFIs vary significantly in their size, philosophy and approach. Therefore these NGOs are structurally not the right type of institutions for undertaking financial intermediation activities, as the byelaws of these institutions are generally restrictive in allowing any commercial operations. These organisations by their charter are non-profit organisations and as a result face several problems in borrowing funds from higher financial institutions. The NGO mFIs, which are large in number, are still outside the purview of any financial regulation. These are the institutions for which policy and regulatory framework would need to be established.

8. Non-Profit Companies as mFIs: Many NGOs felt that combining financial intermediation with their core competency activity of social intermediation is not the right path. It was felt that a financial institution including a company set up for this purpose better does banking function. Further, if mFIs are to demonstrate that banking with the poor is indeed profitable and sustainable, it has to function as a distinct institution so that cross subsidisation can be avoided. On account of these factors, NGO mFIs are of late setting up a separateNon-Profit Companies for their micro finance operations. The mFI is prohibited from paying any dividend to its members. In terms of Reserve Bank of India’s Notification dated 13 January 2000, relevant provisions of RBI Act, 1934 as applicable to NBFCs will not apply for NBFCs (i) licensed under Section 25 of Companies Act, 1956, (ii) providing credit not exceeding Rs. 50,000 ($1112) for a business enterprise and Rs. 1,25,000 ($277 for meeting the cost of a dwelling unit to any poor person, and, (iii) not accepting public deposits.

9. Mutual Benefit mFIs: The State Cooperative Acts did not provide for an enabling framework for emergence of business enterprises owned, managed and controlled by the members for their own development. Several State Governments therefore enacted the Mutually Aided Co-operative Societies (MACS) Act for enabling promotion of self-reliant and vibrant co-operative Societies based on thrift and self-help. MACS enjoy the advantages of operational freedom and virtually no interference from government because of the provision in the Act that societies under the Act cannot accept share capital or loan from the State Government. Many of the SHG federations, promoted by NGOs and development agencies of the State Government, have been registered as MACS. Reserve Bank of India, even though they may be providing financial service to its members, does not regulate MACS.

To be continued.......

[Scorpio_19]

Continued...

10. For Profit mFIs: Non Banking Financial Companies (NBFC) are companies registered under Companies Act, 1956 and regulated by Reserve Bank of India. Earlier, NBFCs were not regulated by RBI but in 1997 it was made obligatory for NBFCs to apply to RBI for a certificate of registration and for this certificate NBFCs were to have minimum Net Owned funds of Rs 25 lakhs and this amount has been gradually increased. RBI introduced a new regulatory framework for those NBFCs who want to accept public deposits. All the NBFCs accepting public deposits are subjected to capital adequacy requirements and prudential norms. There are only a few mFIs in the country that are registered as NBFCs. Many mFIs view NBFCs more preferred legal form and are aspiring to be NBFCs but they are finding it difficult to meet the requirements stipulated by RBI. The number of NBFCs having exclusive focus on mF is negligible.

Capital Requirements
11. NGO-mFIs, non-profit companies mFIs, and mutual benefit mFIs are regulated by the specific act in which they are registered and not by the Reserve Bank of India. These are therefore not subjected to minimum capital requirements, prudential norms etc. NGO mFIs to become NBFCs are required to have a minimum entry capital requirement of Rs. 20 million ($ 0.5 million). As regards prudential norms, NBFCs are required to achieve capital adequacy of 12% and to maintain liquid assets of 15% on public deposits.
Foreign Investment

12. Foreign investment by way of equity is permitted in NBFC mFIs subject to a minimum investment of $500,000. In view of the minimum level of investment, only two NBFCs are reported to have been able to raise the foreign investment. However, a large number of NGOs in the development - empowerment are receiving foreign fund by way of grants. At present, over Rs.40, 000 million ($ 889 million) every year flows into India to NGOs for a whole range of activities including micro finance. In a way, foreign donors have facilitated the entry of NGOs into micro finance operations through their grant assistance.

Deposit Mobilisation

13. Not for profit mFIs are barred, by the Reserve Bank of India, from mobilising any type of savings. Mutual benefit mFIs can accept savings from their members. Only rated NBFC mFIs rated by approved credit rating agencies are permitted to accept deposits. The quantum of deposits that could be raised is linked to their net owned funds.

Borrowings

14. Initially, bulk of the funds required by mFIs for onlending to their clients were met by apex institutions like National Bank for Agriculture and Rural Development, Small Industries Development Bank Of India, and, Rashtiya Mahila Kosh. In order to widen the range of lending institutions to mFIs, the Reserve Bank of India has roped in Commercial Banks and Regional Rural Banks to extend credit facilities to mFIs since February 2000. Both public and private banks in the commercial sector have extended sizeable loans to mFIs at interest rate ranging from 8 to 11 per cent per annum. Banks have been given operational freedom to prescribe their own lending norms keeping in view the ground realities. The intention is to augment flow of micro credit through the conduit of mFIs. In regard to external commercial borrowings (ECB) by mFIs, not-for-profit mFIs are not permitted to raise ECB. The current policy effective from 31 January 2004, allows only corporates registered under the Companies Act to access ECB for permitted end use in order to enable them to become globally competitive players.

Interest Rates

15. The interest rates are deregulated not only for private mFIs but also for formal baking sector. In the context of softening of interest rates in the formal banking sector, the comparatively higher interest rate (12 to 24 per cent per annum) charged by the mFIs has become a contentious issue. The high interest rate collected by the mFIs from their poor clients is perceived as exploitative. It is argued that raising interest rates too high could undermine the social and economic impact on poor clients. Since most mFIs have lower business volumes, their transaction costs are far higher than that of the formal banking channels. The high cost structure of mFIs would affect their sustainability in the long run.

Collateral requirements

16. All the legal forms of mFIs have the freedom to waive physical collateral requirements from their clients. The credit policy guidelines of the RBI allow even the formal banks not to insist on any type of collateral and margin requirement for loans upto Rs 50,000 ($1100).

Regulation & Supervision

17. India has a large number of mFIs varying significantly in size, outreach and credit delivery methodologies. Presently, there is no regulatory mechanism in place for mFIs except for those that are registered as NBFCs. As a result, mFIs are not required to follow standard rule and it has allowed many mFIs to be innovative in its approach particularly in designing new products and processes. But the flip side is that the management and governance of mFIs generally remains weak, as there is no compulsion to adopt widely accepted systems, procedures and standards. Because the sector is unregulated, not much is known about their internal health. Following Committees have examined the road map for regulation and supervision of mFIs
Task Force (appointed by NABARD) Report on Regulatory and Supervision Framework for mFIs, 1999. (Kindly see publications Section for a complete report
Working Group (constituted by Government of India) on Legal & Regulation of mFIs, 2002
Informal Groups (appointed by RBI) on Micro Finance which studied issues relating to (i) Structure & Sustainabilty, ii) Funding (iii) Regulations and (iv) Capacity Building, 2003
Advisory Committee (appointed by RBI) on flow of credit to agriculture and related activities from the Banking System, 2004


18. To address the issue of need for a differential regulatory framework, the latest committee sought answers to the following questions and concerns facing private mFIs in the Country:
(i) Is non-existence of a separate differential regulatory framework a criticalbottleneck hindering the growth of the sector?
(ii) Will MFIs be sustainable in medium term? If so, will they continue to focus on the poor?
(iii) Is access to public / member deposit the key issue for their sustainability?
(iv) Can MFIs finance loans for income generation at interest rates, which are sustainable by the rural poor?
(v) Is it possible to evolve commonly agreed standards for MFI sector covering performance, accounting and governance issues,
which can open up possibilities of self-regulation?
(vi) Has the sector reached a critical mass where regulation becomes important?

19. The Committee observed that while a few of the MFIs have reached significant scales of outreach, the MFI sector as a whole is still in evolving phase as is reflected in wide debates ranging around (i) desirability of NGOs taking up financial intermediation, (ii) unproven financial and organizational sustainability of the model, (iii) high transaction costs leading to higher rates of interest being charged to the poor clients, (iv) absence of commonly agreed performance, accounting and governance standards, (v) heavy expectations of low cost funds, including equity and the start up costs, etc.

20. The current debate on development of a regulatory system for the MFIs focuses on three stages. Stage one - to make the MFIs appreciate the need for certain common performance standards, stage two - making it mandatory for the MFIs to get registered with identified or designated institutions and stage three - to encourage development of network of MFIs which could function as quasi Self-Regulatory Organisations (SROs) at a later date or identifying a suitable organisation to handle the regulatory arrangements. The Committee recommended that while the MFIs may continue to work as wholesalers of microCredit by entering into tie-ups with banks and apex development institutions, more experimentation have to be done to satisfy about thesustainability of the MFI model. Such experimentation needs to be encouraged in areas where banks are still not meeting adequate credit demand of the rural poor.

21. In regard to offering thrift products, the Committee felt that, while the NGO-MFIs can continue to extend micro credit services to their clients, they could play an important role in facilitating access of their clients to savings services from the regulated banks. As regards allowing NGO-MFIs to access deposits from public / clients, the Committee considers that in view of the need to protect the interests of depositors, they may not be permitted to accept public deposits unless they comply with the extant regulatory framework of the Reserve Bank of India. As no depositors' interest is involved where they do not accept public deposits, the Reserve Bank of India need not regulate MFIs.

22. As regards the high interest rates being charged by the MFIs, the Committee felt that the lenders to MFIs may ensure that these institutions adopt a ‘cost-plus- reasonable-margin’ approach in determining the rates of interest on loans to clients.
Conclusions
23. Private mFIs in India, barring a few exceptions, are still fledgling efforts and are therefore unregulated. Their outreach is uneven in terms of geographical spread. They serve micro finance clients with varying quality and using different operating models. Regulatory framework should be considered only after the sustainability of mFI model as a banking enterprise for the poor is clearly established. Experimentation of mFI model needs to be encouraged especially in areas where formal banks are still not meeting adequate credit demand of the rural poor.

[Scorpio_19]

An interesting article by IIM-A on the 'Digital Divide' in India. Download the pdf doc.--

[Scorpio_19]

mF in India-An Overview

Background
The post nationalisation period in the banking sector witnessed substantial amount of resources being earmarked towards meeting the credit needs of the poor. The banking network underwent an expansion phase without comparables in the world. The branch expansion was synergised with massive manpower recruitment drive for manning such branches. Credit came to be recognized as a remedy for many of the ills of the poverty. Credit packages and programmes were designed based on the perceived needs of the poor. Programmes also underwent qualitative changes based on the experiences gained. Besides the programmes initiated by the Central Government, a large number of credit-based programmes were introduced by the state governments with large resource allocations.
While the underlying objectives were laudable and substantial progress was achieved, credit flow to the poor, and especially to poor women, remained low. This led to initiatives that were institution led, that attempted to converge of the existing strengths of rural banking infrastructure and leverage this to better serve the unbanked poor. The pioneering efforts at this were made by National Bank for Agriculture and Rural Development (NABARD), which was vested with an enviable task of framing appropriate policy for rural credit, provision of technical assistance backed liquidity support to banks, supervision of rural credit institutions and other development initiatives.
NABARD during the early eighties conducted a series of research studies in association with MYRADA (a leading NGO from South India) and also independently which showed that despite having a wide network of rural bank branches that implemented specific poverty alleviation programmes and self-employment opportunities through bank credit for almost two decades, a very large number of the poorest of the poor continued to remain outside the fold of the formal banking system. These studies also showed that the existing banking policies, systems and procedures, and deposit and loan products were perhaps not well suited to meet the most immediate needs of the poor. It also appeared that what the poor really needed was a better access to these services and products, rather than cheap subsidised credit. Against this background, a need was felt for alternative policies, systems and procedures, savings and loan products, other complementary services, and new delivery mechanisms, which would fulfill the requirements of the poorest, especially of the women members of such households. The emphasis therefore was on improving the access of the poor to microFinance (mF) rather than just micro-credit.
The launching of its Pilot phase of the SHG (Self Help Group) Bank Linkage programme in February 1992 could be considered as a landmark development in banking with the poor. The SHG-informal thrift and credit groups of poor came to be recognised as bank clients under the Pilot phase.
The strategy involved forming small, cohesive and participative groups of the poor, encouraging them to pool their thrift regularly and using the pooled thrift to make small interest bearing loans to members, and in the process learning the nuances of financial discipline. Subsequently, bank credit also becomes available to the Group, to augment its resources for lending to its members. It needs to be emphasised that NABARD sees the promotion and bank linking of SHGs not as a credit programme but as part of an overall arrangement for providing financial services to the poor in a sustainable manner and also an empowerment process for the members of these SHGs. NABARD, however, also took a conscious decision to experiment with other successful strategies such as replicating Grameen, wholesaling funds through NGO-mFIs.
The NABARD led Pilot Project commenced with the support of the Central Bank of the country, i.e., Reserve Bank of India, from 1992 onwards aimed at promoting and financing 500 SHGs across the entire country, the SHG- bank linkage strategy has come a long way. The strategy includes financing of SHGs promoted by external facilitators like NGOs, bankers, socially spirited individuals and government agencies, as also promotion of SHGs by banks themselves and financing SHGs directly by banks or indirectly where NGOs and similar organisations act as financial intermediaries as well.

Mainstreaming of SHG Bank linkage programme
The Pilot phase was followed by setting up of a Working Group on NGOs and SHGs by the Reserve Bank of India in 1994, which came out with wide ranging recommendations on internalisation of the SHG concept as a potential intervention tool in the area of banking with the poor. The Reserve Bank of India accepted most of the major recommendations and advised the banks to consider lendings to the SHGs as part of their mainstream rural credit operations. Based on very successful feedback of the pilot run of the Programme, NABARD in 1998 crystalised its Vision for providing access to one third of the rural poor through linking of 1million SHGs by 2007. What followed was massive scaling up of the training and capacity building awareness programmes by NABARD covering a large number of officials and staff of NGOs, banks, government agencies and rural volunteers in SHG promotion, nurturing, appraisal and financing
(microFinance may be defined by the as "provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards").

To be continued...

[Scorpio_19]

Continued.....

Shift to the New Paradigm
i) The poor
Perceived thrift as their strength as also as the bonding factor among themselves
Realised that timely and adequate credit was preferable and productive than subsidies and doles.
They needed hassle-free delivery mechanisms.

ii) NGOs

Acted as catalysts of change
Combined social and economic agenda with synergistic effect
Recognised sustainability as the core factor in development.

iii) Banking system

Accepted SHG-bank linkage as a cost effective means of reaching the poor
Accepted peer pressure as collateral substitute for excellent recovery of loans

iv) Government

Formulated supportive policy framework
Encouraged routing of social programmes through SHGs

v) Reserve Bank of India

RBI policy pronouncements on micro Finance led to increased involvement of banks.
Liberalised interest rates and deregulated interest rate structure for micro credit, leading to flexibility in lending rates.

vi) NABARD

Provided inputs in capacity building for banks and partner agencies
Promoted the idea of organising thrift and credit groups among the NGOs as an add-on activity and encouraged linking them with banks.
Provided loanable funds to banks and financial support to eligible mFIs, to ease the fund flow position to the sector.

E. Highlights of SHG bank linkage programme as on 31 March 2004.

During the period April 2003 to March 2004 - 361,731 new SHGs were financed by banks to a tune of Rs 18.55 billion (US $ 412 million) by way of loans.

Cumulatively, banks have lent Rs 39.04 billion (US $ 867 million) to 1,079,091 SHGs.

NABARD has extended a refinance of Rs 7.06 billion (US $ 156 million) to banks during 2003-04 bring the cumulative refinance amount to Rs 21.24 billion (US $ 472 million).

35,294 branches of 560 banks (Commercial banks- 48; Regional Rural banks-196; & Cooperative banks - 316) situated in 563 districts in the 30 states of the country are participating in the programme.

About 16 million poor households have gained access to formal banking system through SHG bank linkage programme.

Nearly 90% of the groups are women only groups.

Promotional grant assistance

Grant assistance extended by NABARD to various agencies/ institutions for promotion & linkage of self-help groups during the year as well as cumulatively is given below;


Agency
2003-04
Cumulative
Number
Amount
(Rs million)
For prom & linkage
Number
Amount
(Rs million)
For prom & linkage
NGOs
221
47.38
37,268
785
151.22
115,279
RRBs
23
6.48
7,895
90
27.58
35,045
CCBs
28
11.60
14,750
29
12.40
15,550









RRB- Regional Rural Bank; CCB- Central Cooperative Bank; Prom- promotion & linkage of groups
Capacity building initiatives.
During 2003-04, about 26,200 bank officials, 7,300 NGO staff, 5,900 government officials and 159,000 Self help group members have been trained with grant support from NABARD. In addition, about 300 faculty members of various banks' training establishments were also trained. Cumulatively 687,000 persons have been trained through various SHG related capacity building programmes.
The rural and semi-urban banking network in India includes about 33,000 branches of scheduled commercial banks, 14,500 branches of Regional Rural Banks and 92,000 Primary Agricultural Cooperative Societies

This mission was achieved in March 2004, well ahead of the time span envisaged with active partnership of different stakeholders.

[Scorpio_19]

NATIONAL FOOD PROCESSING POLICY.


VISION: - To motivate farmers and food processors, and to provide an interactive coupling between technology, economy, environment and society for speedy development of food processing industries to build up a substantial base for production of value added agro food products for domestic and export markets with a strong emphasis on food safety and quality enabling the farmers especially to realize direct benefits of new technology and marketing network and to ensure adequate availability of quality food products for the consumer at economic prices.
MISSION: - To fulfill the VISION so as to contribute to all round economic and social development of India through generation of employment opportunities especially in rural areas.

1. INTRODUCTORY
Food Processing Industry is of enormous significance for India’s development because of the vital linkages and synergies that it promotes between the two pillars of the economy, namely Industry and Agriculture. India is world’s second largest producer of food and has the potential to become number one in due course of time with sustained efforts. The growth potential of this sector is enormous and it is expected that the food production will double in the next 10 years and the consumption of value added food products will grow at a fast pace. This growth of the Food Processing Industry will bring immense benefits to the economy, raising agricultural yields, meeting productivity, creating employment and raising the standard of very large number of people through out the country, specially, in the rural areas. Economic liberalization and rising consumer prosperity is opening up new opportunities for diversification in Food Processing Sector. Liberalization of world trade will open up new vistas for growth.
The Food Processing Industry has been identified as a thrust area for development. This industry is included in the priority lending sector. Most of the Food processing Industries have been exempted from the provisions of industrial licensing under Industries (Development and Regulation) Act, 1951 with the exception of beer and alcoholic drinks and items reserved for Small Scale Sector, like vinegar, bread, bakery, . As far as foreign investment is concerned automatic approval for even 100% equity is available for majority of the processed food items.

The Food Processing Sector
Food processing involves any type of value addition to the agricultural produce starting at the post harvest level. It includes even primary processing like grading, sorting, cutting, seeding, shelling packaging etc.

The sector comprises of the following major areas:

Fruit & Vegetable Major Products
Beverages, Juices, Concentrates, Pulps, Slices, Frozen & Dehydrated products, Wine Potato Wafers/Chips etc.

</B>Fisheries- Major Products
Frozen & Canned products mainly in fresh form.

</B>Meat & Poultry- Major Products
Frozen and packed mainly in fresh form, Egg Powder (only a couple of units).

</B>Milk & Dairy-.Major Products
Whole Milk Powder, Skimmed milk powder, Condensed milk, Ice cream, Butter and Ghee

</B>Grain and Cereals- Major Products
Flour, Bakeries, Biscuits, Starch Glucose, Cornflakes, Malted Foods, Vermicelli, Pasta Foods, Beer and Malt extracts, Grain based Alcohol.

</B>Consumer Industry- Major Products